Spanish solar giant to stay the course

Global solar power operator Fotowatio Renewable Ventures has vowed to pursue ambitions to build a business in Australia despite major hiccups at its large-scale Moree project in NSW.

Country manager Andrea Fontana has revealed that the Spanish company is developing a second multimillion­-dollar solar project ­proposal in the Australian Capital Territory as it awaits the outcome of its revised bid for federal funding for the 150 megawatt Moree venture.

But he has also warned that any tinkering with the policy framework for renewable energy could derail those plans and drive a rethink of expansion plans in Australia.

Origin Energy
boss
Grant King
said last week that the 2020 Renew­able Energy Target could be cut by more than 20 per cent because of declining energy demand, while some heavy polluters want the target scrapped when it is reviewed later this year. However, Mr Fontana said that those sorts of changes would threaten investment plans by undermining confidence in the industry’s outlook.

“You just cannot get the financial support from investors to back your strategy if there is the risk of this changing of environment," he said.

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“Certainty and stability are very important for the development of a real renewable energy sector in Australia."

FRV, an experienced large-scale solar power developer backed by Boston-based private equity firm Denham Capital, was forced to resubmit its application for funding from the government’s $1.5 billion Solar Flagships initiative after its Moree project failed to seal a power sale contract to underwrite the $923 million plant.

The venture’s problems were compounded by the decision of partner BP to exit the worldwide solar sector and also the project.

Reopening the tender process for public funding, as demanded in February by federal Resources Minister
Martin Ferguson
, pits the restructured Moree venture against rival bids from AGL Energy, TRUenergy and a consortium between Infigen and Suntech, which had all been short-listed in the original process.

Spain’s Acciona has since replaced BP as the panel supplier for the Moree plant, set to be Australia’s first large-scale solar photovoltaic project, which will be 69 per cent owned by FRV and the rest by Pacific Hydro.

The Moree venture’s latest proposal involves a similar plant but at a budget more than 5 per cent lower than originally envisaged, reflecting declining prices for silicon PV and lower contractor costs.

“The total project cost has substantially reduced and those reductions have been directly passed through to government in our request for grant funding," said Steve Jackson, FRV’s business development manager in Australia.

The level of radiation at the site had been found to be about 5 per cent lower than indicated by Bureau of Meteorology data, but output should still be about 400 gigawatt hours per year because other parts of the project had been improved, he said.

One potential sticking point, however, is the power purchase agreement for the venture, which will produce about 400 gigawatt-hours per year of electricity. The contract to buy the plant’s output was eventually picked up by Pacific Hydro itself after Origin Energy withdrew its interest in December, but Pacific Hydro has no track record as an energy retailer and is still in the pro­cess of securing a retail licence.

“We certainly have the most developed project and we’ve certainly addressed a number of the concerns that the government had at the time that they reopened the project," said Mr Jackson, a former power development manager at AGL.

“They have, however, focused very strongly on the security of the power purchase agreement in the revised assessment process. Pacific Hydro is a new retailer in the market and we don’t know how the federal government will consider that."

FRV meanwhile plans to lodge its ACT solar power proposal in the first assessment stream, where submissions are due by June 21. It is also considering ventures in other states. “We think that Australia is a very important country in our portfolio," Mr Fontana said. “We think that it is crucial for us to establish ourselves here."